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Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2016

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2016

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

SOCIAL SERVICES LEGISLATION AMENDMENT

(FAMILY PAYMENTS STRUCTURAL REFORM AND

PARTICIPATION MEASURES) BILL 2016

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the

Minister for Social Services, the Hon Christian Porter MP)

 



SOCIAL SERVICES LEGISLATION AMENDMENT (FAMILY PAYMENTS STRUCTURAL REFORM AND PARTICIPATION MEASURES) BILL 2016

 

OUTLINE

 

This Bill will introduce the measures set out below.

Reform family tax benefit Part A and at-home under-18 year old youth fortnightly rates

Family tax benefit Part A fortnightly rates will be increased by $10.08 for each FTB child in the family aged up to 19.  An equivalent rate increase, of around $7.48 per fortnight, will apply to youth allowance and disability support pension recipients aged under 18 and living at home.  These increases will apply from 1 July 2018.

Reforms to family tax benefit Part B

From 1 July 2017, the Bill will introduce a new rate structure for family tax benefit Part B, and make other amendments to the rules for Part B, to:

·          increase the standard rate by $1,000.10 per year for families with a youngest child aged under one;

·          maintain the current standard rate for families with a youngest child aged between one and under five;

·          maintain the current standard rate for families with a youngest child aged between five and under 13;

·          maintain the current standard rate for single parents with a youngest child aged between 13 and 18 who are at least 60 years of age, grandparents and great-grandparents;

·          introduce a reduced standard rate of $1,000.10 per year for individuals with a youngest child aged 13 to 16 (currently $2,832.40) who are not single parents aged 60 or more or grandparents or great-grandparents; and 

  • remove entitlement to FTB Part B for single parent families who are not single parents aged 60 or more or grandparents or great-grandparents, from 1 January of the calendar year their youngest child turns 17.  .

Phase out the family tax benefit Part A and Part B supplements

The Bill will phase out the family tax benefit Part A end-of-year supplement by reducing it to $602.25 a year in 2016-17, and to $302.95 a year in 2017-18.  It will then be withdrawn from 1 July 2018.

The family tax benefit Part B end-of-year supplement will also be phased out.  It will be reduced to $302.95 a year in 2016-17, and to $153.30 a year in 2017-18.  It will then be withdrawn completely from 1 July 2018.



Financial impact statement

MEASURE

FINANCIAL IMPACT OVER THE FORWARD ESTIMATES (FISCAL BALANCE, WHOLE OF GOVERNMENT)

Reform family tax benefit Part A and at-home under-18 year old youth fortnightly rates

Cost of $1,166.7 million

Reforms to family tax benefit Part B

Saving of $787.9 million

Phase out the family tax benefit Part A and Part B supplements

Saving of $6,253.2 million

Note:  These figures are indicative.  Figures are whole of government fiscal balance over the four-year period from 2016-17 to 2019-20.

 

STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS

The statements of compatibility with human rights appear at the end of this explanatory memorandum.

 



SOCIAL SERVICES LEGISLATION AMENDMENT (FAMILY PAYMENTS STRUCTURAL REFORM AND PARTICIPATION MEASURES) BILL 2016

 

 

NOTES ON CLAUSES

Abbreviations used in this explanatory memorandum

·          Family Assistance Act means the A New Tax System (Family Assistance) Act 1999

·          Family Assistance Administration Act means the A New Tax System (Family Assistance) (Administration) Act 1999

·          Social Security Act means the Social Security Act 1991

·          Social Security Administration Act means the Social Security (Administration) Act 1999

Clause 1 sets out how the new Act is to be cited - that is, as the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Act 2016.

Clause 2 provides a table setting out the commencement dates of the various sections in, and Schedules to, the new Act.

Clause 3 provides that legislation that is specified in a Schedule is amended or repealed as set out in that Schedule.

 



Schedule 1 - Payment rates

 

 

Summary

Family tax benefit Part A fortnightly rates will be increased by $10.08 for each FTB child in the family aged up to 19.  An equivalent rate increase, of around $7.48 per fortnight, will apply to certain youth allowance and disability support pension recipients aged under 18.  These increases will apply from 1 July 2018.

Background

The standard FTB child rate for an individual whose family tax benefit is calculated under method 1 is set out in clause 7 of Schedule 1 to the Family Assistance Act.  There are two different FTB child rates, depending on whether the FTB child is under 13 or has reached 13 years of age.  These FTB child rates are referred to as ‘FTB child rate (A1)’ for the purposes of indexation under Schedule 4 to the Family Assistance Act.

From 1 July 2018, these rates will be increased by $262.80 a year (equivalent to $10.08 per fortnight).  The increase will be applied to these FTB child rates after they have been indexed on 1 July 2018 in accordance with the usual rules. 

Youth allowance is calculated under the Youth Allowance Rate Calculator in section 1067G of the Social Security Act.  The tables in points 1067G-B2 and 1067G-B3 set out a person’s maximum basic rate, depending on their situation and whether or not they are independent. 

From 1 July 2018, the maximum basic rate of youth allowance for a person who is:

·          not independent, lives at home and is not yet 18 years of age;

·          independent, an accommodated independent person and not yet 18 years of age; or

·          independent, in supported state care and not yet 18 years old;

 

will be aligned to the method 1 FTB child rate applicable to an FTB child who has reached 13 years of age.

Aligning these two rates of payment will avoid confusion for families, and make sure there is no financial incentive for an FTB child to leave full-time secondary study to claim youth allowance.

Disability support pension is calculated under Pension Rate Calculator D in section 1066A of the Social Security Act for people who are under 21 years of age, who are not blind and who do not have dependent children.  Pension Rate Calculator E provides for the calculation of the rate of disability support pension for a person who is under 21 years of age and is permanently blind.

 



From 1 July 2018, the maximum basic rate of disability support pension for a person who is not a member of a couple, under 18, not independent and not living away from the person’s parental home because of a medical condition of the person, will also be aligned to the method 1 FTB child rate applicable to an FTB child who has reached 13 years of age.

Explanation of the changes

Part 1 - Family tax benefit

Amendments to the Family Assistance Act

Schedule 4 provides for the indexation of specified rates and amounts.  These include the FTB child rates set out in clause 7 of Schedule 1 which are referred to in Schedule 4 as ‘FTB child rate (A1)’.  These are annual amounts.

Item 1 inserts a new clause 7 into Schedule 4, which, in effect, increases each annual amount of FTB child rate (A1) by $262.80.  The increase would occur on 1 July 2018, after the amounts have been indexed under Schedule 4 in accordance with the current rules.  The note at the end of new clause 7 addresses a technical issue.

Item 2 is an application provision which ensures that the new increased amounts are used to calculate the rate of family tax benefit for days on and after commencement (being 1 July 2018).

Part 2 - Youth allowance and disability support pension

Amendments to the Social Security Act

The rate of disability support pension for a person who is under 21, not blind and has no dependent children is worked out using Pension Rate Calculator D at the end of section 1066A.  The maximum basic rates table is in point 1066A-B1.  Item 1 in the table at the end of point 1066A-B1 specifies the maximum basic rate (both annual and fortnightly) for a person who is not a member of a couple, who is under 18, not independent and not living away from the person’s parental home because of a medical condition.

Item 3 omits the annual amount in column 3 of item 1 and substitutes a reference to the annual linked rate .  This concept is then defined in new point 1066A-B2 (inserted by item 6 ) by reference to column 2 or item 2 of the table in clause 7 of Schedule 1 to the Family Assistance Act (being the FTB child rate applicable to an FTB child who has reached 13 years of age).

Item 4 omits the fortnightly amount in column 4 of item 1 and substitutes a reference to the fortnightly linked rate .  This concept is then defined in new point 1066A-B3 (inserted by item 6 ) through a formula that converts the annual rate in column 3 (the annual linked rate) into a fortnightly rate. 

Item 5 makes a consequential amendment to note 4 at the end of point 1066A-B1.

Items 7 to 10 make similar amendments to Pension Rate Calculator E at the end of section 1066B to link the maximum basic rate of disability support pension, for a blind person who is otherwise in the same situation as described above, to the FTB child rate applicable to an FTB child who has reached 13 years of age.

Youth allowance is calculated under the Youth Allowance Rate Calculator in section 1067G. 

The table in point 1067-B2 lists maximum basic rates of youth allowance for the various categories of people who are not independent.  Item 1 of this table provides the maximum basic rate for a person who lives at home and is not yet 18 years old.

Item 11 omits the fortnightly amount in column 3 of item 1 and substitutes a reference to the linked rate .  This concept is then defined in new point 1067G-B2A (inserted by item 13 ) by reference to the FTB child rate for an FTB child who has reached 13 years of age (the annual amount in column 2 of item 2 of the table in clause 7 of Schedule 1 to the Family Assistance Act) and provides a formula to convert the relevant FTB child rate to a fortnightly amount. 

Item 12 makes a consequential amendment to the note at the end of point 1067G-B2. 

The table in point 1067-B3 lists maximum basic rates of youth allowance for the various categories of people who are independent and not long-term income support students.  Item 1 of this table provides the maximum basic rate for a person who is an accommodated independent person and not yet 18 years of age.  Item 3 of this table provides the maximum basic rate for a person who is in supported state care and not yet 18 years old. 

Item 14 omits the fortnightly amounts in table items 1 and 3 in column 3 and replaces the amounts with references to the linked rate .  This concept is then defined in new point 1067G-B3AAA (inserted by item 16 ) by reference to the FTB child rate for an FTB child who has reached 13 years of age (the annual amount in column 2 of item 2 of the table in clause 7 of Schedule 1 to the Family Assistance Act), which also provides a formula to convert the relevant FTB child rate to a fortnightly amount. 

Item 15 makes a consequential amendment to the note at the end of point 1067G-B3. 

The amendments described above directly link certain youth allowance and disability support pension maximum basic rates for under 18 year-olds to the FTB child rate for an FTB child who has reached 13 years of age.  As the relevant FTB child rate is indexed on 1 July of each year, the linked youth allowance and disability support pension rates will also be increased. 

The amounts that have been omitted by the amendments described above would have been subject to indexation or adjustment under the Social Security Act.  Items 17 to 21 make consequential amendments to remove references to these amounts from the relevant indexation and adjustment provisions.

Item 22 is an application provision, which ensures that the new linked amounts are used in working out the rate of youth allowance and disability support pension for days on and after commencement (being 1 July 2018).

 



Schedule 2 - Family tax benefit Part B rate

 

 

Summary

From 1 July 2017, this Schedule will introduce a new rate structure for family tax benefit Part B, and make other amendments to the rules for Part B, to:

  • increase the standard rate by $1,000.10 per year for families with a youngest child aged under one;
  • maintain the current standard rate for families with a youngest child aged between one and under five;
  • maintain the current standard rate for families with a youngest child aged between five and under 13;
  • maintain the current standard rate for single parents who are at least 60 years of age, grandparents and great-grandparents with a youngest child aged between 13 and 18;
  • introduce a reduced standard rate of $1,000.10 per year for individuals with a youngest child aged 13 to 16 (currently $2,832.40) who are not single parents aged 60 or more or grandparents or great-grandparents, and
  • remove entitlement to FTB Part B for single parent families who are not single parents aged 60 or more or grandparents or great-grandparents, from 1 January of the calendar year their youngest child turns 17. 

Background

Under the current rules, an individual’s standard rate of family tax benefit Part B is worked out using the table in clause 30 of Schedule 1 to the Family Assistance Act.  There are two different rates, depending on whether the individual’s youngest child is under five years of age or five years and over.  An FTB child who has turned 16 is disregarded for the purposes of family tax benefit Part B unless they are a senior secondary school child (as defined in section 22B of the Family Assistance Act) and the calendar year in which the child turned 18 has not ended. 

 

From 1 July 2017, amendments made by this Schedule introduce a new rate structure for family tax benefit Part B. 

 

Under the new structure, an individual’s standard rate will be increased by $1,000.10 per annum where their youngest child is under one year of age. 

 

The standard Part B rate will not change for families with a youngest child aged between one and under five.  The standard Part B rate will also not change for families with a youngest child aged between five and under 13 and for single parents who are at least 60 years of age, grandparents and great-grandparents with a youngest child aged between 13 and 18 (end of calendar year they turn 18). 

 



However, a reduced rate of $1,000.10 will be introduced for single parents with a youngest child aged 13 to 16 who are not aged 60 or more or grandparents or great-grandparents.  These individuals will be able to access family tax benefit Part B for an FTB child who is a senior secondary school child until the end of the calendar year in which the child turns 16 (rather than until the end of the calendar year in which the child turns 18 which is the current rule).

Explanation of the changes

Amendments to the Family Assistance Act

 

Subclause 29(3) of Schedule 1 to the Family Assistance Act currently disregards an FTB child who has turned 16 for the purposes of family tax benefit Part B rate unless the child is a senior secondary school child.  Section 22B of the Family Assistance Act defines a senior secondary school child

 

Item 1 amends section 22B to provide new definitions of senior secondary school child for the purposes of subclause 29(3). 

 

New subparagraph 22B(1)(a)(ia) defines a senior secondary school child for the purposes of subclause 29(3) insofar as it relates to determining a standard Part B rate for a single parent aged at least 60 years, a grandparent or a great-grandparent with a youngest child aged at least 13 years.  In this situation, the child must be aged 16 or 17, or 18 where the calendar year in which the child turns 18 has not ended.  This definition will also be relevant in working out the rest of the individual’s Part B rate (for example, energy supplement) by operation of new subclause 29(4), as inserted by item 6 Item 4 inserts a related note at the end of subsection 22B(1). 

 

New subparagraph 22B(1)(a)(ib) defines senior secondary school child for the purposes of subclause 29(3) insofar as it relates to any other provision in Part 4 of Schedule 1 (which provides the rules for calculating an individual’s Part B rate).

 

Items 2 and 3 make other necessary consequential amendments to section 22B.

 

Clause 30 of Schedule 1 sets out the standard rates for family tax benefit Part B, depending on the individual’s family situation (that is, whether the individual’s youngest FTB child is under five years of age or is aged five or over).  Item 7 repeals the table in clause 30 and inserts a new table.

 

Under the new table, there will be five standard rates for Part B.

 

The first new rate will apply where the individual’s youngest FTB child is aged under one year.  This is item 1 in the new standard rates table in clause 30. This rate will be the equivalent of the current standard rate (Part B) that applies where the youngest FTB child is aged under five, as it would have been indexed on 1 July 2017 under the ‘old’ rules, plus $1,000.10.  New subclause 30(2) has this effect. 

 

The second rate will apply where the individual’s youngest FTB child is aged at least one year but less than five years of age.  This is item 2 in the new standard rates table in clause 30.  This rate will be the equivalent of the current standard rate (Part B) that applies where the youngest FTB child is aged under five years, as it would have been indexed on 1 July 2017 under the ‘old’ rules.  New subclause 30(3) has this effect.

 

The third rate will apply where the individual’s youngest FTB child is aged at least five years but less than 13 years of age.  This is item 3 in the new standard rates table in clause 30.  This rate will be the equivalent of the current standard rate (Part B) that applies where the youngest FTB child is aged five or over, as it would have been indexed on 1 July 2017 under the ‘old’ rules.  New subclause 30(4) has this effect.

 

The same rate (worked out under new subclause 30(4)) will apply where the individual’s youngest child is at least 13 years of age and the individual is not a member of a couple and is aged 60 or more or is a grandparent or great-grandparent of that youngest child.  This is item 4 of the new standard rates table in clause 30.

 

Finally, a new standard Part B rate of $1000.10 will apply where the individual’s youngest FTB child is aged at least 13 years but less than 17 years of age and item 4 of the new rates table does not apply.  This is item 5 of the new standard rates table in clause 30. 

 

New subclauses 30(5) and (6) then define a grandparent or great-grandparent to take account of biological, adoptive, step and relationship child-parent relationships. 

 

The new amounts in the table in clause 30 will apply from 1 July 2017, and these amounts will be indexed for the first time on 1 July 2018 in accordance with the usual rules ( subitem 11(2) refers).  

 

Item 10 inserts a new subclause 3(2A) into Schedule 4 of the Family Assistance Act which makes it clear that the new amounts will not be indexed on 1 July 2017. A new heading is also inserted.

 

Item 5 makes a consequential amendment to subclause 29(3), which is required because of the insertion of the new table in clause 30.

 

Item 8 makes a minor consequential amendment to clause 2 of Schedule 4 to the Family Assistance Act.

 

Item 9 makes a minor change to the indexation provisions (base quarter) as the first indexation of the new amounts in the table in clause 30 of Schedule 1 will occur on 1 July 2018. 

 

Item 11 is an application provision.  It provides that the amendments made by this Schedule apply in working out the rate of family tax benefit for days on or after commencement (that is, 1 July 2017).  It also provides that the first indexation of the new amounts in the table in subclause 30(1) of Schedule 1 is to be on 1 July 2018. 

 



Schedule 3 - Family tax benefit supplements

 

Summary

 

This Schedule will phase out the family tax benefit Part A supplement by reducing it to $602.25 a year from 1 July 2016, and to $302.95 a year from 1 July 2017.  It will then be withdrawn from 1 July 2018.

The family tax benefit Part B supplement will also be phased out.  It will be reduced to $302.95 a year from 1 July 2016, and to $153.30 a year from 1 July 2017.  It will then be withdrawn from 1 July 2018.

Background

 

Starting in 2016-17, the end-of-year family tax benefit Part A and family tax benefit Part B supplements will be phased out.  These amounts will not be available from 1 July 2018.

 

The family tax benefit Part A and Part B supplements are components of the rate of family tax benefit, and are added into rate after the end of the relevant income year when certain conditions are satisfied and FTB is reconciled.  This means that an individual’s supplements for any given income year cannot be paid until after the end of that income year.  Therefore, while the supplements are being reduced in the 2016-17 income year, there is no practical effect on payment of the supplement until after 1 July 2017.  

 

 

Explanation of the changes

 

Part 1 - Amendments commencing 1 July 2016

 

Amendments to the Family Assistance Act

 

For 2016-17, the end-of-year family tax benefit Part A and family tax benefit Part B supplements will be reduced. 

 

Clause 31A of Schedule 1 to the Family Assistance Act provides for the calculation of the FTB Part B supplement (referred to in clause 31A as the FTB (B) gross supplement amount ).  Item 1 repeals subclauses 31A(2) and (3) and substitutes a new subclause 31A(2), which resets the FTB (B) gross supplement amount to $302.95. 

 

Clause 38A of Schedule 1 provides for the calculation of the family tax benefit Part A supplement (referred to in clause 38A as the FTB gross supplement amount ), which is a per-child amount.  Item 2 repeals subclauses 38A(3) and (4) and substitutes a new subclause 38A(3), which resets the FTB gross supplement amount to $602.25. 

 



The FTB gross supplement amount and the FTB (B) gross supplement amount are usually indexed in accordance with movements in the CPI on 1 July each year (although indexation of these amounts is currently paused under clause 3(8) of Schedule 4 to the Family Assistance Act).  The amendments made by items 3 and 4 ensure that these amounts are no longer subject to indexation.

 

Item 5 repeals a spent indexation provision. 

 

Item 6 is an application provision.  It provides that the amendments made by Part 1 this Schedule apply in working out the rate of family tax benefit for days on or after commencement (1 July 2016).

 

Part 2 - Amendments commencing 1 July 2017

 

Amendments to the Family Assistance Act

 

For 2017-18, the end-of-year family tax benefit Part A and family tax benefit Part B supplements will be further reduced. 

 

Item 7 repeals subclause 31A(2) of Schedule 1 and substitutes a new subclause 31A(2), which resets the FTB (B) gross supplement amount to $153.30. 

 

Item 8 repeals subclause 38A(3) and substitutes a new subclause 38A(3), which resets the FTB gross supplement amount to $302.95. 

 

Item 9 is an application provision.  It provides that the amendments made by Part 2 of this Schedule apply in working out the rate of family tax benefit for days on or after commencement (1 July 2017).

 

Part 3 - Amendments commencing 1 July 2018

 

Amendments to the Family Assistance Act

 

From 1 July 2018, the end-of-year family tax benefit Part A and family tax benefit Part B supplements will no longer be available. 

 

Division 2A of Part 4 of Schedule 1 to the Family Assistance Act provides for the rate of the family tax benefit Part B supplement.  Item 21 repeals this Division.

 

Division 2A of Part 5 of Schedule 1 to the Family Assistance Act provides for the rate of the family tax benefit Part A supplement.  Item 22 repeals this Division.

 

The method statements in clauses 3 and 25 of Schedule 1 set out the steps to be taken in working out an individual’s Part A rate where method 1 and method 2 apply respectively.  Items 14 and 17 remove the paragraphs in these method statements which provide for the family tax benefit Part A supplement to be included in the rate. 

 

Clauses 29 and 29A of Schedule 1 provide rules for calculating an individual’s Part B rate.  Items 18 to 20 amend these clauses to remove paragraphs which provide for the family tax benefit Part B supplement to be included in the rate. 

 

An individual’s supplement amount (defined by reference to the family tax benefit Part A supplement) is relevant in working out an individual’s maintenance income ceiling for certain purposes.  The relevant provisions are clauses 24N and 24R of Schedule 1 to the Family Assistance Act.  Items 15 and 16 make consequential amendments to these provisions to reflect the repeal of the family tax benefit Part A supplement.

 

Under the current rules, payment of the family tax benefit Part A supplement is linked to the health check and immunisation requirements through sections 61A and 61B of the Family Assistance Act.  Item 13 repeals these sections, while items 10 to 12 make other necessary consequential amendments. 

 

Amendments to the Family Assistance Administration Act

 

Section 32A of the Family Assistance Administration Act currently ensures that the family tax benefit supplements are disregarded in calculating an individual’s rate of family tax benefit unless and until the relevant family tax benefit reconciliation conditions are satisfied.  Section 105A then requires that the Secretary review an individual’s rate under section 105 where the family tax benefit reconciliation conditions are satisfied so as to include the supplements in the rate.  As a consequence of the repeal of the family tax benefit supplements, item 23 repeals section 32A, while item 26 repeals section 105A. 

 

However, the family tax benefit reconciliation conditions are also relevant for other purposes (such as the maintenance income test) and are therefore retained.  Item 24 makes some technical adjustments to the wording of section 32B so that the family tax benefit reconciliation conditions can continue to operate.

 

Item 25 makes a consequential amendment to the definition of adjusted Part A rate in subsection 35D(4) to remove a reference to the repealed clause 38A of Schedule 1 to the Family Assistance Act.

 

Items 27 to 34 make consequential amendments to various review provisions, which refer to provisions that are being repealed.

 

Item 35 is an application provision.  It provides that the amendments made by Part 3 of this Schedule apply in working out the rate of family tax benefit for days on or after commencement (1 July 2018).

 



STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the

Human Rights (Parliamentary Scrutiny) Act 2011

SOCIAL SERVICES LEGISLATION AMENDMENT (FAMILY PAYMENTS STRUCTURAL REFORM AND PARTICIPATION MEASURES) BILL 2016

 

Schedule 1 - Payment rates

 

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

The Schedule will deliver more timely assistance to provide better help to families (including income support families) with day-to-day living expenses, and help support children to grow up healthy and participate in educational opportunities, in preparation for becoming self-reliant adults. 

 

From 1 July 2018:

·            Family tax benefit Part A fortnightly rates will increase by $10.08 for each FTB child in the family aged up to 19.

·            An equivalent rate increase, of around $7.48 per fortnight, will apply to youth allowance recipients aged under 18 and living at home.

·            Aligning these two rates of payment will avoid confusion for families, and make sure there is no financial incentive for an FTB child to leave full-time secondary study to claim youth allowance.

·            The rate increases will also flow through to certain other payment rates for young people - the under-18 rates of disability support pension, special benefit and ABSTUDY.

 

Human rights implications

The Schedule engages the following human rights:

Right to social security

The Schedule is consistent with supporting the right to social security.

From 1 July 2018, the Schedule will provide families receiving the standard FTB Part rates a rate increase of $10.08 per fortnight.  An equivalent rate increase, of around $7.48 per fortnight, will apply to youth allowance recipients aged under 18 and living at home.  This rate increase will also flow on to other payment rates that are the same payment rate as the under 18 at home youth allowance maximum basic rate.



Conclusion

The amendments in the Schedule are compatible with human rights because they do not limit access to social security or family payments.

 



Schedule 2 - Family tax benefit Part B rate

 

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

This Schedule makes amendments to the A New Tax System (Family Assistance) Act 1999

From 1 July 2017, the Schedule will introduce a new rate structure for family tax benefit Part B, and make other amendments to the rules for Part B, to:

·          increase the standard rate by $1,000.10 per year for families with a youngest child aged under one;

·          maintain the current standard rate for families with a youngest child aged between one and under five;

·          maintain the current standard rate for families with a youngest child aged between five and under 13;

·          maintain the current standard rate for single parents who are at least 60 years of age, grandparents and great-grandparents with a youngest child aged between 13 and 18;

·          introduce a reduced standard rate of $1,000.10 per year for single parents with a youngest child aged 13 to 16 (end of calendar year they turn 16) (currently $2,832.40) who are not aged 60 or more or grandparents or great-grandparents;

  • remove entitlement to FTB Part B for single parent families who are not single parents aged 60 or more or grandparents or great-grandparents, from 1 January of the calendar year their youngest child turns 17. 

These reforms will improve the sustainability of the family payments system over the long term, while continuing to provide assistance to families in need.

Human rights implications

These amendments engage the following human rights:

Right to social security

Article 9 of the International Covenant on Economic, Social and Cultural Rights recognises the right of everyone to social security, while article 11 recognises the right to an adequate standard of living for an individual and their family, including adequate food, clothing and housing, and the continuous improvement of living conditions.

 

 

Rights of the child

Article 26 of the Convention on the Rights of the Child requires countries to recognise the right of the child to benefit from social security.  Benefits should take into account the resources and the circumstances of the child and persons having responsibility for the maintenance of the child.

The objective of family payment reform is to ensure that the family payments system remains sustainable in the long term.  The United Nations Committee on Economic, Cultural and Social Rights recognises that a social security scheme should be sustainable, and that the conditions for benefits must be reasonable and proportionate.  

To the extent that introducing a new rate structure for FTB Part B limits the right to social security, this is reasonable and proportionate.

The Australian Government supports low and middle income families with dependent children and young people through the payment of FTB and youth support payments.  FTB Part A and youth support payments are per-child payments that have the primary objective to ensure all children and young people have access to a basic acceptable standard of living.  A family’s rate of assistance is determined by family income.  FTB Part B provides additional assistance to families with one main income, to recognise the role of parents and other carers as carers and members of the workforce. 

 

The changes in this Bill will not affect an individual’s right to FTB Part A or youth support payments. The vast majority (99 per cent [1] ) of families who currently receive FTB Part B also receive FTB Part A.  The one per cent of families who receive FTB Part B only, primarily have income above the FTB Part A income -cut-out ($101,957 for a one child family).  All eligible families will continue to receive FTB Part A and / or youth support payments on a per child basis, and will benefit from the $10 fortnightly increase to these payments from 1 July 2018.

 

FTB Part B is one of a number of social security payments available to families with dependent children and young people to assist with the cost of living. Changes in one area of the social security system are often introduced alongside other changes in order to offset or lessen individual impacts while providing targeted assistance to a particular cohort. As such, it is important to recognise that the changes in FTB Part B do not occur in isolation. 

 

The Bill in its entirety will pay for the Jobs for Families package, which introduces sweeping reforms of the child care system. These investments will help families by enabling and encouraging greater workforce participation.  The Jobs for Families package will encourage parents to re-engage or increase their workforce participation, which will in turn improve social outcomes for families and their children. Individuals with low incomes will continue to receive ongoing assistance through various Australian Government payments, which will assist them in maintaining an adequate standard of living.

 

The changes to the FTB Part B rates are structured around the age of the youngest child in a family and build on the payment’s current workforce participation focus. This reflects the changing financial demands and levels of capacity a family has to work as their children grow older and become more independent.  

 

This Bill will provide for a higher level of assistance for around 136,000 families each year with a youngest child aged under one by increasing the maximum standard rate of FTB Part B by $1,000.  The new maximum standard rate of FTB Part B for a family with a youngest child aged under one will increase from $4,055 to $5,055 per annum - a fortnightly increase of around $38.  This recognises that families with newborn children have a higher need to stay at home to bond with and care for their child. 

 

This Bill retains the current maximum standard rates for almost 1 million FTB Part B families who have a youngest child aged between one and under 13.  Families with a youngest child aged between one and under 5 will continue to be eligible for a maximum annual standard rate of $4,055.  During the early childhood years, parents often need to stay at home, or balance work and caring responsibilities.  The maximum standard of FTB Part B currently reduces to $2,832 when a youngest child turns five and enters compulsory education, and primary carers have a greater capacity to move into the workforce or increase their workforce participation.

 

For families with older children, FTB Part B will be better targeted. This targeting is proportionate, and avoids undue economic hardship by encouraging parents with reduced care requirements to move into the workforce or increase their workforce participation.  Where a youngest child has reached the age of 13, the Government considers it reasonable to expect primary carers to engage in the workforce, or to increase their workforce participation. 

 

From 1 July 2016, couple families are no longer eligible to receive FTB Part B for a youngest child aged 13 and over (unless they are a grandparent or great grandparent).  However, the Government recognises that single parent families may have a lesser capacity to engage in the workforce and will continue to provide targeted assistance to these families. 

 

Around 114,000 single parents will continue to be eligible for FTB Part B at a reduced rate.  This Bill reduces the maximum standard rate from $2,832 to $1,000 for a youngest child between 13 and 16 (end of calendar year the child turns 16).  The United Nations Committee on Economic, Cultural and Social Rights recognises that a social security scheme should be sustainable, and that the conditions for benefits must be reasonable and proportionate. Reducing the rate of FTB Part B for single parents with a youngest child aged 13 to 16 (end of calendar year they turn 16) will maintain support for single parents with older children while ensuring the family payments system is sustainable in the long term and is better targeted to support those who need it most.

 

Single parents aged at least 60 years of age and grandparents and great-grandparents will continue to access FTB Part B at the current rate until the end of the calendar year their youngest child turns 18, recognising that these families may have less capacity to engage in the workforce.

 

The changes will ensure the family payments system is sustainable and support is retained to assist with the direct costs of raising dependent children.  Therefore, the changes are aimed at achieving a legitimate objective, there is a rational connection between the limitations of the rights to social security and an adequate standard of living and the objective, and the limitations are reasonable and proportionate measures for the achievement of the objective.

 

Conclusion

These amendments are compatible with human rights because they advance the protection of human rights and, to the extent that these changes limit access to family payments, these limitations are reasonable and proportionate and families are otherwise provided for.

 



Schedule 3 - Family tax benefit supplements

 

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

The Schedule will phase out the family tax benefit Part A and Part B supplements by reducing them each year from 1 July 2016.  These supplements will then be withdrawn from 1 July 2018.  The family tax benefit Part A and B supplements are components of the rate of family tax benefit, and are added into the rate after the end of the relevant income year when certain conditions are satisfied.

Human rights implications

These amendments are likely to engage the following human rights:

Right to social security

Article 9 of the International Covenant on Economic, Social and Cultural Rights recognises the right of everyone to social security, while article 11 recognises the right to an adequate standard of living for an individual and their family, including adequate food, clothing and housing, and the continuous improvement of living conditions.

Rights of the child

Article 26 of the Convention on the Rights of the Child requires countries to recognise the right of the child to benefit from social security.  Benefits should take into account the resources and the circumstances of the child and persons having responsibility for the maintenance of the child.

The objective of the family payment reform package is to ensure that the family payments system remains sustainable in the long-term.  The United Nations Committee on Economic, Cultural and Social Rights has stated that a social security scheme should be sustainable and that the conditions for benefits must be reasonable, proportionate and transparent.  

To the extent that phasing out the FTB supplements limits the right to social security, this is reasonable and proportionate.

Under current rules families who receive FTB Part A or FTB Part B are entitled to an end of year supplement; however, recipients of youth income support payments are not.  Schedule 1 of the Bill aligns the fortnightly payment rates for FTB Part A (for FTB children aged 13 to 19), youth allowance, disability support pension and ABSTUDY through a one-off increase to maximum fortnightly rates, while Schedule 3, by phasing out of supplements, ensures that the package of government assistance for families with dependent young people will, for the first time be, the same. 

Under current rules, a family with a young person aged 16 who receives FTB Part A is eligible for $242.34 per fortnight and $7,044.50 per year ($6,318 in fortnightly assistance and the $726.35 end of year supplement).  However a family with a young person of the same age who is eligible for a youth income support payment receives less assistance at the same family income.  This family would be entitled to a maximum payment of $241.00 per fortnight or $6,266 per year which is an annual difference of $778.50. 

Schedule 1 and 3 contribute towards improving the adequacy of fortnightly assistance, while simplifying government assistance for families with children by phasing out the end of year supplement.  This is consistent with the recommendations of the McClure review, which highlighted the unworkability of a system that maintains 20 main payment types with in excess of 50 supplement categories. The changes are some of the initial steps in the move towards simplifying the social security system, which will improve customer accessibility over time.

While the changes impact FTB families after the end of an entitlement year, they ensure that FTB families receive the same amount of government assistance to meet the direct costs of raising their children as families with children who through youth income support payments.  The redistribution of money from a lump sum amount to a higher fortnightly payment will assist families more effectively, providing greater financial capacity to meet the day to day costs for themselves and their children.

Schedule 3 also recognises that the Government’s investment in service delivery reform such as Single Touch Payroll will provide real time verification of a family’s income which will enhance the accuracy of income reporting. 

Under current rules, families who wish to receive FTB by fortnightly instalment need to provide estimated annual income to receive their entitlement.  A family’s entitlement to FTB is reconciled after an entitlement year when their actual income is known, and their entitlement to the end of year supplement is assessed.  Families may be reconciled with a top-up, debt or have nil change (they have already received the correct amount of FTB).

The FTB supplements were announced in 2004 (when there was a budget surplus of over $13 billion) in response to high levels of reconciliation debt experienced by the FTB population. This debt was often due to family’s not being able to accurately predict changes in income or changes in circumstances such as a return to work.   In comparison, individuals in receipt of youth income support payments have their entitlement determined on base year parental income (verified income from a previous financial year) and fortnightly personal income so do not require a reconciliation process.

The phasing out of the FTB supplements recognises that Single Touch Payroll will eventually negate the need for an end of year reconciliation process for FTB and the supplements to offset the risk of debt.



The changes will ensure the family payments system is sustainable and support is retained to assist with the direct costs of raising dependent children. The changes aim to achieve a legitimate objective, there is a rational connection between the limitations of the rights to social security and an adequate standard of living and the objective, and the limitations are reasonable and proportionate measures for the achievement of the objective.

Conclusion

These amendments are compatible with human rights because they do not limit or preclude people from gaining or maintaining access to social security in Australia and, to the extent that these changes limit access to family payments, these limitations are reasonable and proportionate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Circulated by the authority of the Minister for Social Services, the Hon Christian Porter MP]




[1] DHS COGNOS Instalment Package - December 2015